President’s Column – April 2022
The steel construction industry was calling for stability and calm after a very difficult period during and post COVID-19. Famine followed by feast didn’t do anybody any favours and the relationships between suppliers and sub-contractors with Tier 2 steelwork contractors was certainly more than tested. This column is usually drafted about one month before the publishing date, so when I stated last month typical energy prices increases assumed no invasion of the Ukraine, they turned out to be of little use. Obviously, the “tanks rolled in” and the world is in a different place. Our hearts go out to all those that are suffering, and I’m sure we are all hoping that common sense will prevail sooner rather than later. Sanctions will affect our industry, particularly for the bridge market; energy prices have spiked and we’ve seen steel prices increase by £250 per tonne with little or no notice. What chaos this will bring in a buoyant market is very difficult to predict, but sooner or later, somewhere some of the links in the chain from Client to Tier 1 contractors to Tier 2 sub-contractors and Tier 3 sub-contractors/suppliers are going to start breaking and when it starts in earnest, more failures will occur due to the domino effect of uninsured debts.
It is very annoying that steel price increases are always headline news, whereas similar material increases elsewhere in the construction market always appear to travel under the radar. I’m left wondering how the market, which has always been fiercely competitive from Tier 1 to Tier 3, is going to cope in a new world order where fixed prices might be the exception rather than the rule. With all the things that have happened over the last couple of years, I’ve been amazed with how resilient the steel construction industry has been to absorb these continual metaphorical “punches”. I think some of us feel we’ve taken more punches than “Rocky” recently.
As previously mentioned, other than the problems with unstable increases in material, energy, and wage costs etc, the steel construction market is buoyant at the present time. Opinion is divided on how long this buoyant market will continue for, some think it might change in early 2023, others think positive market conditions could continue for another two to three years. I guess nobody really knows for sure, but there are signs from other industries that things are just starting to stabilize. More worryingly, how many companies are now starting to see problems with cash flow? Reverse VAT doesn’t help with this regard, but that battle was lost long ago. With rampant inflation will come an increase in interest rates. Commentators talk of base rates of 3%; I wonder how many people remember base rates north of 14%.
With all of the restrictions of COVID-19 being lifted, the BCSA will be holding the AGM and the Annual Dinner again this year, on 30th June in London. It would be great to see as many BCSA members as possible at both events. We are promising to reduce the heavy speech at the Annual Dinner, so that we have more time to enjoy the professional entertainment and to mingle and catch up at the bar.